Paris Bike Rental Scheme Goes Global

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The US company Clear Channel Outdoor has supplied Oslo, Stockholm and Barcelona with rental bikes. And Beijing wants to trump Paris, though under its own steam: 50,000 rental bicycles have been announced for the Olympic Games in 2008.

In Germany things are proceeding at a more unhurried pace. The German state rail company Deutsche Bahn has seen solid business with its own rental scheme, the rather uninspiringly named "Call a Bike." The program started in Berlin, Frankfurt, Munich and Cologne, and Stuttgart and Karlsruhe have now joined in. There are 4,500 bikes in use and payment is by the minute, currently 8 cents.

The newcomer Nextbike in Leipzig, which finances its small fleet partly through advertisements on the bicycles, is satisfied with business so far -- it even wants to establish a branch in New Zealand.

Both German corporations get by without parking stations. The customer can leave the bike on any street corner -- which is convenient for that customer but a pain for the next one, who never knows precisely where to find a bike. In Stuttgart, Deutsche Bahn is trying the station principle for the first time, but the customer is still required to order by phone: even the shortest trip requires a call at the beginning and end of the bike ride to the call center in Halle. Competitor Jean-François Decaux doesn't think much of this method. "That doesn't work," he says. "Deutsche Bahn got a total of 520,000 rentals that way last year in four German cities. We do that in Paris in just three days."

The system in Paris is much simpler. The customer, having registered once, takes his or her access card to the station and checks out a bicycle from a post there. Readers in the posts or at a computer terminal automatically register every transaction and pass on the data to the control center. The cyclist can almost forget that the bike isn't actually their personal property. The cost of this convenience is, however, enormous. JCDecaux has hired 350 employees for the rental scheme, 50 of whom are occupied exclusively with riding the bikes from one station to another to keep up with demand. The overall annual cost comes to around €2,500 per bicycle. At least, that's how much the corporation charges a city that wants to take on the rental service without granting advertising privileges in return. "With advertising," says Jean-François Decaux, "of course it's completely free for the city."

Free it may be, but is it cheap? The city gives up advertising revenue of an unknown value: this is pocketed by JCDecaux. In Paris the company anticipates sales of €600 million over the course of the 10-year contract.

Would it not be a better deal for a city simply to sell its advertising rights for money, and to the highest bidder? With the revenue it could then pay for a bike rental service or any other programs -- and in the end, if possible, have a tidy sum left over. When it comes to package deals like this one, that suspicion always lingers.

And this is what has led to a change of policy in Hamburg. The contract for 15 years of outdoor advertising in the city was up for tender. Up until then JCDecaux had held the rights; the company bid again -- this time with a bicycle rental scheme. The Ströer Group from Cologne teamed up with Deutsche Bahn and promised to bring Call a Bike to Hamburg, while Berlin entrepreneur Hans Wall pulled out all the stops with an offer of 500 collection posts for dog droppings including a force of 30 men in uniform. As a bonus he offered colorfully illuminated designer bus shelters.

Hamburg made its decision in October: from now on JCDecaux and Ströer are to split the advertising rights, and in exchange Hamburg will receive a total of €508 million. The city will then hold a separate tender process for a bike rental scheme at the beginning of next year, independent of the advertising companies. Jean-François Decaux is undeterred: "We will bid for that too."

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